Oil down in Asia on Iraq export boost, stronger dollar

The commodity entered a bull market last week on hopes producers will take action to ease the supply glut.SINGAPORE: Oil prices eased in Asia today, ending a seven-day run, following news that Iraq will boost crude exports, while the dollar strengthened on speculation the Federal Reserve could hike interest rates this year.

The commodity entered a bull market last week -- after rising more than 20 per cent from recent lows below $40 a barrel -- on hopes producers will take action to ease the supply glut.

But gains were chipped in Asia after Bloomberg News reported that Iraq, OPEC's second-biggest producer, will increase exports by about five percent after an agreement to resume shipments from three oil fields.

At around 0345 GMT (0815 IST), US benchmark West Texas Intermediate for delivery in September was down 54 cents, or 1.11 per cent, to $ 47.98 a barrel. Brent crude fell 73 cents, or 1.43 per cent, to $50.15.

Analysts said a stronger dollar ahead of the Fed's annual symposium from Thursday in Jackson Hole, Wyoming, also dented demand as it makes oil more expensive for holders of other currencies.

Fed chair Janet Yellen will address the conference Friday, with global financial markets zooming in on what she has to say about its plans for monetary policy.

Talk of a fresh rate rise were fanned at the weekend by Fed vice chairman Stanley Fischer who said yesterday the US economy was picking up and meeting all the bank's targets.

The greenback rose against the yen, euro and pound today.

"Oil is buffeted by US dollar gains and news that Iraq plans to boost its exports, stoking fears that the supply glut will worsen," said Bernard Aw, an analyst with IG Markets in Singapore.

"Fresh developments about an OPEC discussion on a possible output freeze next month could provide a base for oil prices," he told AFP.

Both main contracts surged last week as it emerged that the OPEC producers club and its rivals will meet next month, with speculation they could discuss ways to tackle an oversupplied market.

However, despite the rally in oil prices analysts are doubtful a deal to freeze output would be reached.

"The stars remain misaligned for an OPEC/non-OPEC freeze agreement, but it is beneficial for producers to talk," British bank Barclays said in a market analysis.

"Oil prices will likely experience another short-term dip in the coming weeks, in our view, before more sustainably moving to average $50" in the fourth quarter.